Monopolizing a Niche

In the start-up and entrepreneurship world, Peter Thiel is an icon. One of his oft-quoted pieces of advice is to “monopolize a niche.” When Donald Trump announced his candidacy and came out against the immigration status quo, I was advising a few start-ups and my first thought was, “My God, he is monopolizing a niche!” As Ann Coulter pointed out, immigration was the “Thousand Dollar Bill” on the floor that no one would touch, except Trump. Ted Cruz then tried to get in on the niche, but it was too late. Trump next built on that niche and expanded into trade issues and an attack on Wall Street. It was brilliant to watch.

While the Republican “autopsy” after Romney’s loss suggested reaching out to Hispanics via immigration reform and amnesty, two authors noted data points suggesting other opportunities for Republicans. Timothy Carney wrote that the financial meltdown in 2008 was a golden opportunity to re-brand the Republican Party as the party of Main Street vs. Wall Street, the populist party vs. the crony capitalists. If Romney had increased his share of blue collar, white voters in a few states, he would have won. Carney is a Pro-Life, anti-war Republican. He first came to prominence as part of a cadre of young, anti-war conservatives, and has made his bones writing about crony capitalism and the revolving door in D.C. between government and lobbying.

Steve Sailer, who was a data marketing guy before he began writing, developed “The Sailer Strategy” which looked at, among other things, party affiliation as it related to affordable family formation. Over the years Sailer has taken the available data and dissected it in different ways than others, which led him to understand that, with the advent of identity politics, the Republican Party had by default become the “White Party”, while the Democrats became a coalition of non-whites and other marginalized groups -the “Coalition of the Fringes”.

Sailer quotes Lee Kwan Yue, founder of the state of Singapore, who said:

In multiracial societies, you don’t vote in accordance with your economic interests and social interests, you vote in accordance with race and religion. Supposing I’d run their system [British Parliamentary Democracy] here, Malays would vote for Muslims, Indians would vote for Indians, Chinese would vote for Chinese.

For Sailer those are just the realities of democracy in a multicultural state, not his own ideological wishes. As a marketer he then looks at what is the optimal strategy given that demographic reality.

Sailer calls himself and “Americanist” or a “Citizenist” and thinks that all policies should be judged as to whether they are good or bad for current U.S. Citizens. War, trade, immigration: does a policy benefit those who already live here and are citizens? He does not think that everyone in the world has a right to migrate here, nor that inside every foreigner is, to paraphrase R. Lee Ermy in Full Metal Jacket, an “American waiting to get out.” It has been suggested that Sailer’s ideas were the seeds for the Ann Coulter book, Adios Americathat inspired Trump on immigration. And the election results look like The Sailer Strategy in action.

It has been made clear by grass-roots activism through both Bush and Obama administrations that regular citizens were concerned about immigration policies. Regular Americans burned up phone lines to oppose amnesties and “reforms”. In business such an unaddressed problem is a huge opportunity, and the ignored insights of Carney and Sailer allow someone like Trump to immediately address that opportunity.

Another popular term in business is “fit”. Is there a good “fit” between a job candidate and the corporate culture? Or is there a good “fit” between a company and a possible acquisition? Managing “culture” and human capital is big business. Does a company have the right human capital to achieve their goals? Is the Culture aligned with the Human Capital and with the Strategic goals. (In Aristotelian terms, are the Material, Formal, and Final causes in sync) . Human Resource departments, undergraduate and graduate admissions, all take human capital and culture seriously. U.S. citizens thought that their government should as well. Trump saw that.

Robert Putnam at Harvard found a result -horrifying to mainstream sensibilities, when he looked at the idea that “Diversity is Strength.” It turns out it is not. In fact, Putnam found that diversity harms social capital and trust.

His research shows that the more diverse a community is, the less likely its inhabitants are to trust anyone – from their next-door neighbour to the mayor.

This is a question of culture and “fit”. The only solution to these negative aspects of diversity is assimilation, and that takes time. The Triple Melting Pot theory suggests that ethnic identity changes from country of origin to religion in three generations.

…the unity of American life is indeed a unity in multiplicity, the pluralism that this implies is of a very special kind.

Trump’s comments about immigration were about human capital. In Arizona he sounded like a college admissions associate when he talked about “fit”:

We also have to be honest about the fact that not everyone who seeks to join our country will be able to successfully assimilate. It is our right as a sovereign nation to choose immigrants that we think are the likeliest to thrive and flourish here.

Do immigrants “fit” -are they an asset to the country and to fellow citizens, or a drain? Are they from a culture that is compatible with American culture or not? Is it fair, is justice being done, allowing someone in who won’t “make” it? Is enough time being given, and are policies enacted that allow for assimilation? From an MBA perspective, everything Trump did made sense given the market opportunities and the type of political messaging that was present, or absent.

Trump looked at immigration as a Human Capital issue about culture and fit. He tied this to an elite, “Wall Street” preference for a cheap human capital policy, rather than a “fit” human capital policy. He looked at the political landscape, saw an unaddressed problem, monopolized a niche, expanded on that niche and re-branded the Republicans into a populist party. Then he won.